Palantir, Lockheed and these other defense stocks rise on heels of Iran conflict

By William Gavin

Defense spending is set to get 'more urgent and less controversial,' an analyst notes, and numerous stocks could benefit

Palantir's stock is poised to outpace the U.S. Global Technology & Aerospace & Defense ETF on Monday.

The U.S. conflict with Iran is boosting interest in defense stocks.

"Defense spending was already set to surge in 2026 and a protracted war with Iran will make the spending more urgent and less controversial," Stifel analyst Jonathan Siegmann said in a Monday note to clients.

On Saturday, the Pentagon began Operation Epic Fury, joining Israel to launch a military campaign against Iran. President Donald Trump said Saturday that Iranian Supreme Leader Ayatollah Ali Khamenei was killed in the U.S.-Israel strikes.

War can be good for business: There's a reason the U.S. Global Technology & Aerospace & Defense exchange-traded fund WAR, which rose nearly 1% on Monday, trades under the ticker "WAR."

And some defense stocks are seeing bigger moves that that.

Shares of Palantir Technologies (PLTR) , a company that recently played a role in the capture of former Venezuelan President Nicolás Maduro, gained 5.8% in on Monday. Northrop Grumman's stock (NOC) was up 6%, and Lockheed Martin's (LMT) rose 3.4%.

Shares of L3Harris Technologies (LHX) and General Dynamics (GD) also advanced in intraday action.

Karman (KRMN), Curtiss-Wright (CW) and AeroVironment (AVAV) are expected to be major beneficiaries of the conflict, William Blair analysts said Monday. Karman is a supplier for missile-system and drone providers, while Curtiss-Wright makes components for the military and AeroVironment is a leading provider of drones and missiles, according to analyst Louie DiPalma.

AeroVironment's stock surged more than 17% before investors retreated on a report that the U.S. Space Force was reopening a $1.4 billion program originally awarded to the company's BlueHalo subsidiary. Shares dropped 17% on the news.

Opinion: U.S. strikes on Iran will likely boost defense stocks. Here's what will keep the cash flowing even after the conflict ends.

The Defense Department last week paid AeroVironment $186 million for the first procurement in a five-year, $990 million contract for its Switchblade loitering missile systems. RTX (RTX) and Lockheed Martin also recently signed multiyear deals to provide the Pentagon with missiles.

Shares of RTX, formerly Raytheon, were up 4.7% on Monday.

"We will award companies bigger, longer contracts for proven systems so those companies will be confident in investing more to grow the industrial base that supplies our weapons systems more and faster," Defense Secretary Pete Hegseth said in January.

Stifel favors drone makers Ondas (ONDS) and Kratos Defense & Security Solutions (KTOS), as well as CACI (CACI), a major government contractor.

Read: Trump blacklists Anthropic - and OpenAI swoops in

European defense companies could also benefit from the conflict with Iran, according to J.P. Morgan. Analysts note that the companies most exposed to the U.S. market are BAE Systems (BAESY), Renk (XE:R3NK), Leonardo DRS (DRS) and QinetiQ (UK:QQ).

But there is a risk in investing in defense stocks ahead of or during a war, with Siegmann noting that gains can be impacted by how drawn-out a conflict is. Investors tend to pull back as peace talks show signs of progress.

"Given the U.S. has assembled the largest set of military assets since the 2003 invasion of Iraq, we anticipate this conflict will be unfortunately more extended and violent than we have seen in recent years," Siegmann said Monday.

Trump told the Daily Mail over the weekend that he expects the conflict to last around four weeks.

See: Iran conflicts just adds to wall of worry for U.S. stocks, says Citi strategist

-William Gavin

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03-02-26 1704ET

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